Lower Cost Medical Insurance in the Future?

Today shares of Aetna dropped 20% in the stock market. Shares of other insurance companies were also lower today and have been falling during the past month. Specifically, Wellpoint (parent company of Blue Cross of California), UnitedHealth (Parent of Pacificare of California), and HealthNet have all been losing value on the New York Stock market. (Blue Shield of California and Kaiser Permanente are not-for-profit health insurance companies and are not publicly traded on the stock market.)

Experts point to the rising cost of medical care coupled with the inability to raise premiums as the reason for the reduction in price for Aetna. The other medical insurance companies have been hurt by a reduction in membership or rates of growth in membership. Stock market analysts fear that health insurance companies may be forced to lower prices in order to attract new members. Lower prices or premiums with rising medical costs would shrink the margin (i.e., profit) of medical plans.

While this may not bode well for share holders of medical insurance companies, it could mean that we are on the verge of a much needed reduction in health insurance premiums.

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